by John Celentano, Inside Towers Business Editor
Capital expenditure by the U.S. mobile network operators is one of the most closely watched financial metrics as an indicator of the health of the wireless infrastructure business.
Why? Capex is an indicator of the level of investment that MNOs are making in their networks. Capex drives network equipment procurement and use of all related capitalized services including site acquisition, licensing, permitting, engineering, installation, and maintenance activity.
Ultimately, capex determines how the hundreds of companies and thousands of workers in the wireless infrastructure supply chain get paid.
Over the past five years, MNO capex has grown at a 2.5 percent CAGR. The 2016-2018 period reflects the wind down of 4G LTE deployments as aggregate capex leveled out in the $27 billion range.
Beginning in 2019, however, the carriers commenced their 5G installations and steadily ramped through 2020. Capex grew to more than $30 billion in 2020 even as the COVID-19 pandemic raged.
Over the next three years, the U.S. MNO capex is expected to grow at a 4.7 percent CAGR reaching $35-36 billion by 2023.
The data shown in the chart represents only network infrastructure capex among the U.S. MNOs including AT&T, T-Mobile, Verizon, UScellular, and the other regional carriers.
DISH Network capex is not included in the actual data through 2020 but it is factored into the projected data from 2021 and beyond as DISH’s 5G network build progresses.
The data does not include capital investments that MNOs have made for spectrum licenses or mergers and acquisitions financing.
The data also excludes vendor financing contributions. AT&T has used financing from Ericsson and Nokia to supplement the capex that is normally taken from the company’s free cash flow.
The forecast does not include any incremental funding from prospective government programs such as the Infrastructure Bill or the “Rip and Replace” program.
As well, the chart does not count other capital investments by tower companies, fiber companies and data center operators. Analyses of those sectors will be presented in upcoming issues.
This article is an excerpt from the full U.S. Wireless CapEx Report that is presented in the Inside Towers Intelligence Q1 2021 issue. Intelligence is a new quarterly publication that does a deep dive into all aspects of the wireless infrastructure ecosystem.
For more information about Intelligence, and how to subscribe: https://insidetowers.com/intelligence/
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